INDIANAPOLIS (April 8, 2009) - Lt. Governor Becky Skillman and the Indiana Housing and Community Development Authority (IHCDA) announced today up to $25,000 in zero-interest, non-amortizing loans for Hoosiers to purchase foreclosed homes.
Hoosiers who buy foreclosed homes to use as their primary residence can qualify for a $15,000 loan from IHCDA's Market Stabilization Fund. The Federal Home Loan Bank of Indianapolis has committed to supply matching loans of up to $10,000.
"When Hoosiers open the door to their new home, they open several windows of opportunity," Lt. Governor Skillman said. "This is a unique use of federal dollars that will encourage homeownership while revitalizing communities."
The money comes from HUD's Neighborhood Stabilization Program (NSP), which allocated $84 million to IHCDA. The state will use $33 million of that allocation for the Market Stabilization Fund. Assistance from this fund will be made available to income-qualified individuals and families who choose to purchase foreclosed homes in areas of the state in greatest need of assistance.
The state has identified areas of greatest need, with the assistance of the IndianaUniversityCenter for Urban Policy and the Environment, using a combination of HUD-provided data and proprietary data.
How the Market Stabilization Program Works:
- IHCDA will offer up to $15,000 (not to exceed 20% of purchase price) to assist homebuyers with the acquisition and/or rehabilitation of a foreclosed residential property located within an area of greatest need.
- These funds may be used in conjunction with the IHCDA First Home product, FHA, VA, USDA, or prime fixed rate product. No adjustable rate or subprime mortgage products will be allowed for the purchase of these homes.
- Home buyers may use these funds for closing costs and down payment assistance related to the purchase of a foreclosed home or residential property that will be used as the primary residence.
- To be eligible for rehab funds a residential structure must not meet local building code and therefore is unable to be purchased in its present condition.
- Buyers may use both acquisition and rehabilitation assistance in the purchase of a home, but the combined assistance may not exceed $15,000.
These funds will be in the form of a zero-interest, non-amortizing, second mortgage loan. These funds do not have to be repaid as long as home buyers use the home as a principal residence for at least ten years. If the homebuyer sells the home within the first five years, the subsidy is repayable to IHCDA on a shared net proceeds basis. If the homebuyer refinances within the first five years, the entire subsidy is repayable to IHCDA. After year 5 and through year 10, the homebuyer will retain 20% in equity of the award amount per year.
This funding will be available to home buyers that are at or below 120% of area median income and who intend to occupy the home themselves.
Home buyers will be required to participate in 8 hours of pre-purchase education provided by an IHCDA certified counselor.
IHCDA will utilize participating single-family lenders, the Indiana Association of REALTORS, HomeEC certified housing counseling agencies, and other partners to provide marketing and outreach to potential eligible homebuyers for this funding.
IHCDA will be coordinating with lenders/servicers, Fannie Mae, Freddie Mac and HUD to list foreclosed properties on a centralized website, http://www.indianahousingnow.org/. Lenders will be required to sell the properties listed on the site at a discount that meets or exceeds NSP guidelines. Site will be live by the end of April.
A downloadable brochure for consumers is available on IHCDA's Web site, http://www.ihcda.in.gov/.
Source: Web site of Lieutenant Governor Becky Skillman
Indiana is the only state using NSP money in a statewide program to help people buy foreclosed homes.
"Comprehensive community revitalization is part of the prosperity-building process, and Indiana is combining resources to create a virtual toolbox of funding sources to assist in this revitalization," said Sherry Seiwert, Executive Director of IHCDA. "It is our hope that the Market Stabilization Program will have a true impact on stimulating the housing market here in our state, which could lead to stimulation of Indiana's overall economy."